Prechter & Depew

Two guys who I respect sit down and talk about deflation, the dollar, gold and socionomics. Check out the two part video located on the EWI home page, between interviewer Kevin Depew of Minnyanville and Mr. Deflation, Bob Prechter.

It is worth it for all of us to take in and consider all rational dialogue.

Edit (12:29) Hey, have a happy new year! This mess will be waiting for us bright and early in 2010. ;-)

USD & Various Treasury Yields

What is the story here? 5, 10 and 30 year treasury yields are marching in lock step saying these bonds' would-be buyers want greater compensation if they are going to take on the debt of a society that literally lives by inflation, and by debt. The yields are rising as if to say "Look, we will keep the illusion intact as long as you are willing to manufacture more debt to sustain it, but we must be better compensated as the moral risks get higher here in Full Hubris '10".

The key yield to watch is of course the 3 month t-bill, which will tell the Fed what it is going to do (you don't really believe these clowns are in control of such things, as they pretend to make these decisions, do you?) and if the t-bill tells the Fed that rates are going to rise, then we will find out how sustainable the economic recovery is.

As an aside, you may know that I have a position in the real world where my finger is on the pulse of the US manufacturing economy. The better than expected mid-west manufacturing activity is not a lie. There is recovery, and I see it elsewhere as well. I'll talk about my vantage point on the 'real' economy a bit more in NFTRH. 'THE' recovery is not in dispute and this is surely no perma-bear, perma-Armageddon blog.

But it is sustainability that is the question, and rising yields, if they are not stopped at our 'line in the sand' of secular change, will answer a lot of questions in that regard as we move forward. The dollar has predictably been rescued from the abyss that the MSM were trumpeting. Now there are actually strong dollar wise guys coming out of the woodwork. Now things get interesting.

LAM.to From a subscriber...

Subject: Laramide Levitation

Gary,

Happy New Year!

Sweeet timing on Laramide!

Thanks for the heads up!

Doug

Are You Bullish?

If you are bullish now, but were not bullish last March, you are the guy or girl in the room saying "who's the mark?" and may be in for a rude surprise. If you were bullish at the March bottom, perhaps you have got your stuff together and I am just a cranky contrarian jumping the gun.

Every instinct I had in November '08 and March '09 told me that deflationist and bearish were the wrong way to be. The current situation with the long bond yield rising muddies up the waters today, so until it is resolved, the commodity and inflation trade must be considered ongoing... along with perhaps the stock market dragging its tired ass higher as part of what is now becoming the anti-treasury trade.

But any bull reading anything decent, reputable or sound into any of this is just a slave to convention, and believe me, there are many highly educated people in finance. That could prove to be their undoing. Talk of risk premiums in bonds and the like is just so much bromide now because we are off the charts, Treasury is talking about somehow taking us further off the charts (despite the mini rebellion in the t-bond) and stock market longs are populated by the momentum herd, trend followers and increasingly, a weary public.

It is funny; an early subscriber of NFTRH cancelled last summer as he had come across some information that the markets were going to crash in the Fall. It would be lights out so he no longer needed the newsletter. I should have known right then and there that the rally would extend longer than I thought likely. It is amazing how easily people fall for bear fairy stories in the age of inflation policy a go-go, which works constantly against the deflation/bear market argument.

Well right now, it is bull fairy stories being constructed by the troubadours on Wall Street and the massive and self-interested financial services industry the world over, not to mention the financial media that touts the agenda 24/7. The risk to the bullish stance - at least for interim hard correction - remains untenable. Real contrarians endure and await opportunity, whether it be next week or in the spring (repeat: I only need one or two good trades a year, I only need...)

Meanwhile, the gold-silver ratio remains subdued but in bullish pretense. Dat be bearish for everything else my friends, if it turns up. A rising GSR would signal the draining of the swamp despite the best efforts of policy on crack.

Bull wise guys coming out of the woodwork

A fairly common sight lately has been the re-emergence of the once thought to be extinct (really, are these shills ever really gone?) bull wise guys peddling a strong dollar, strong US markets and THE economic recovery. I am sure Larry Kudlow is preparing a festive New Year celebration.

Yes, it is a bit easier to be bullish the dollar now that it has bounced and it is easy to be bullish the markets now that they have generally remained buoyant in the face of USD strength. 'It's the best of all worlds!' cheer the touts.

Well, I have have been awaiting a dollar bounce and as the NFTRH 1 Year Ago spot below reminded me, I had an original SPX target for Hope '09 of 1200. That was in the young and innocent days when I felt there could be a relatively (relative to the FrankenMess we have today, that is) healthy recovery, which of course would entail some healthy market action along the way. If SPX makes 1200 all in one shot, it will likely be as good as it gets and it will not be healthy. You go smoke some crack if you want to, I'll stick to risk vs. reward theory no matter how long it takes to pay off.

Anyway, I have ragged on Jim Sinclair on ocassion but thought his most recent note interesting, as it states exactly how I feel as Hope '09 drags its tired ass into Full Tout... Full Hubris '10.

From Mr. Gold:

As we approach the New Year it seems the party has already begun, and the commentators are all full of spirits. I can't find a bear in the woods.

According to them the equity market is going up, the dollar is going up, commodities are going up, and even lip service is being paid to gold, but lip service only. The conviction being blasted out there is a line up of former pro-gold guys like Faber and Rogers. Today they rolled out Barton Biggs for his bullish equity-bullish dollar forecast. Soros and Buffett have already made their contribution to a dollar rally.

Now go back to February of 2009. You could not find a bull on anything anywhere. I did an interview for a major F-TV station where I specifically said that the bottom of the equity market would occur in March 09. Even the interviewer argued with me.

Right now it is the absolute opposite even though the economic improvement given as green shots do not equal the real rate of inflation at the checkout counter.

In my opinion, the economy as a result of unprecedented stimulation is simply bottom bouncing, an experience seen in 1932.

Very rational mainstream media

Levitation

"I've got levitation" sang Roky Erickson of Texas' 13th Floor Elevators, a band as uniquely American as any I can think of. This band that influenced rock music the world over, was and is virtually unknown here in its own country, but then again what do the herd know? ;-) In fact, sadly, Roky ended up in a psychiatric hospital due to his possession and use of pot.

Here, check out some classic American garage rock from the 60's: You're Gonna Miss Me.

Okay, back to the boring stuff. Here is an excerpt from NFTRH64: Levitation

$RUT Roh

Party on Garth!

NFTRH65 Out Now, NFTRH 1 Year Ago

NFTRH65 is out now, with some light macro and the opening phase of gold stock charting that may lead to more intense opportunities before too long. A bit of uranium is in there as well.

Meanwhile, from NFTRH13 dated December 27, 2008:

We're Only Making Plans

My investment and trading style involves always having a plan that is subject to revision and evolution at all times, and generally serves as a road map for navigating financial markets that can be complicated on a good day and downright violent and irrational on a bad day (or in the case of recent events, many bad days clustered together).

In 2008 I had done my homework and decided who and what I was and despite the traumatic moves in markets that went wildly against my bullish gold miner stance, I held strong and took good advantage of HUI 150, which you will recall was merely the latest (and ultimately last) downside target after 250, 220 and 175 were snapped like dried kindling during Armageddon ’08. But a target it was, and it held.

The original plan, before the acute phase of panic began, was to hold gold miners and cash in the face of an on-coming deflation impulse. Bearish oil, bearish copper, bearish human hopes for prosperity, bearish the Ponzi scheme known as the United States – and by extension, global – financial system, I held what my research told me to hold; cash (along with t-bills and short term treasuries) and gold miners. Once again, here I will interject my belief that gold miners are to be ‘played’ only after one has seriously considered ownership of the actual precious metals, especially gold.

As noted many times, the reason to hold gold miners is that they should perform well in an economic contraction environment as these companies’ cost drivers decline relative to their product. Well, as the market crisis grew more violent and human hopes crashed along with cost inputs like oil and base metals while gold held its own, I grew more bullish the gold miners as they came on sale at crazy prices.

The plan morphed and I began to have visions of an epic opportunity in the making; something we would look back at years from now and thank the trading gods we had the focus and courage to capitalize on while most people were panicking. Even as I was suffering financially in the short term and being negatively reinforced by everything around me, I was able to get outside the October/November bubble in fear, look at it objectively, tweak the plan and remain on course and on message.

The message was updated weekly here at NFTRH and regardless of how things were to turn out for the investment stance – and I believe it is well on its way to being validated – I wanted to have it documented during historic times. The letter’s entire ‘Q1’ will remain posted on the website as a sales tool, yes. But it is in reality a once in a lifetime opportunity for me to have shown exactly how the service operates in the most difficult of circumstances; historically difficult circumstances. After all, everybody is a genius in good times and I am glad I waited until the world began falling apart to see if Notes From the Rabbit Hole could pass muster.

Both portfolios are now back above ‘baseline’ (their levels at NFTRH launch in late September), the panic phase is over and a plan is in place. This one involves a broad global market recovery from unsustainably morose sentiment levels with the gold miners – relative strength leaders already having doubled off the bottom – leading. This makes sense because not only did the same forces that drove the world’s reserve debt note impulsively higher also drive gold mining fundamentals higher, they put a serious exclamation point on the proceedings in the form of gold-oil, gold-industrial metals and now gold-thirty year rate ratios.

It is advisable to tune out hyperbole (bullish and bearish), look at convention with distrust (and really, has conventional thought not been the undoing of the vast herds of followers, including most financial professionals?) and to have your own plan, subject to ongoing revision through rational thought.

At this point, my personal plan holds that a bear market rally is beginning as the markets grind out a bottom. The rough target for the S&P500 is in the 1200 area. The plan holds that the gold miners have begun a new bull market; one that may eventually make heads spin. But be aware, the plan also holds a contingency that if our broad market ‘next leg down’ is as severe as I suspect it could be, some serious profit taking may come into play in the gold miners as well. After the recent panic, we know all too well what can happen in emotionally charged markets despite fundamentals.

Markets are now functioning ‘normally’ and the major media, always a day late and a dollar short, continue to beat the dead economic horse. The new US administration will continue a rich history of inflationary policy that has been the product of the most myopic academic minds on the planet; a Keynesian nirvana, which is actually the worst nightmare of honest economists, the likes of whom come from the Austrian school of von Mises and Rothbard.

The world turns, a global depression (in many assets and industries) is likely to get worse before it gets better, misperceptions will run rampant and within the confusion, there will be opportunity. I am not here to save the world. Biiwii.com was started as a free resource to try to do its small part in that regard. Most of the world yawned. It is time to make money, preserve wealth or do whatever else is necessary to navigate a world in financial and social disarray.

Thank you dear subscribers for being aboard NFTRH during its first quarter in existence. 2009 stands to be an interesting and potentially profitable year [it certainly has been]. We will remain outside whatever box gets constructed post Armageddon ’08 and attempt not to predict the future, but to interpret events along the way in service to an ongoing and revisable plan.

Snuck in under the cover of Christmas Eve...

More Satanic monetary policy from the US Treasury. This is not a drill; this mess is going over a cliff, sooner... or later.

Either Geithner is the most moronic SecTreas we have ever had, or he is a stooge for administration forces that care only about agenda and know or care nothing of economics.

Again I will ask, how are they going to fund these dead legacy mortgages, these remnants of a failed system, with the treasury market posturing rebellion? Are they going to seize your IRA and direct you to buy T-bonds? Are they going to 'engineer' a market crash, driving the herd back into treasuries so that the inflation machinery can get cranked up again? How are they going to fund this insanity? Taxation alone? I don't think so.

Along with the material gifts our children receive this morning, maybe our most important gift will be in sincerely hoping this insanity fails miserably and we get the crash we deserve, right here and now so WE can start paying the bills and picking up the pieces as a new system eventually rises from the ashes. Because the old system is being run by what look like the worst batch yet of macro Wizards.

I am off to continue celebrating with real people and will again suspend my revulsion about this. I will continue attempting to protect my family as best as possible by navigating the often Wonderland-like aspects of this fantasy and playing the cards they give me.

Meanwhile, sent in by a reader:

NEW YORK (AP) -- The government has handed its ATM card to beleaguered mortgage giants Fannie Mae and Freddie Mac.

The Treasury Department said Thursday it removed the $400 billion financial cap on the money it will provide to keep the companies afloat. Already, taxpayers have shelled out $111 billion to the pair, and a senior Treasury official said losses are not expected to exceed the government's estimate this summer of $170 billion over 10 years.

Treasury Department officials said it will now use a flexible formula to ensure the two agencies can stand behind the billions of dollars in mortgage-backed securities they sell to investors. Under the formula, financial support would increase according to how much each firm loses in a quarter. The cap in place at the end of 2012 would apply thereafter.

By making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress.

While most analysts say the companies are unlikely to use the full $400 billion, Treasury officials said they decided to lift the caps to eliminate any uncertainty among investors about the government's commitments. But the timing of the announcement on a traditionally slow news day raised eyebrows.

"The companies are nowhere close to using the $400 billion they had before, so why do this now?" said Bert Ely, a banking consultant in Alexandria, Va. "It's possible we may see some horrendous numbers for the fourth quarter and, thus 2009, and Treasury wants to calm the markets."

Fannie Mae and Freddie Mac provide vital liquidity to the mortgage industry by purchasing home loans from lenders and selling them to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, or about half of all mortgages. Without government aid, the firms would have gone broke, leaving millions of people unable to get a mortgage.

The biggest headwind facing the housing recovery has been the rise in foreclosures as unemployment remains high. The two companies, facing mounting losses from mortgage defaults, were taken over by the government in September 2008 under the authority of a law Congress passed in the summer of 2008.

So far the government has provided $60 billion to Fannie Mae and $51 billion to Freddie Mac. The assistance is being provided in exchange for preferred stock paying a 10 percent dividend. The Bush administration first pledged up to $100 billion in support for each company, an amount that was doubled to $200 billion for each by the Obama administration in February.

Treasury officials will provide an updated estimate for Fannie and Freddie losses in February when President Barack Obama sends his 2011 budget to Congress. Though the administration has yet to disclose its long-term plans for the two companies, they are unlikely to return to their former power and influence.

The news followed an announcement Thursday that the CEOs of Fannie and Freddie could get paid as much as $6 million for 2009, despite the companies' dismal performances this year.

Fannie's CEO, Michael Williams, and Freddie CEO Charles "Ed" Haldeman Jr. each will receive $900,000 in salary, $3.1 million in deferred payments next year and another $2 million if they meet certain performance goals, according to filings with the Securities and Exchange Commission.

The pay packages were approved by the Treasury Department and the Federal Housing Finance Agency, which regulates Fannie and Freddie.

That pay is far less than what their predecessors earned. Former Fannie CEO Daniel Mudd received $10.2 million in 2008 and former Freddie CEO Richard Syron pocketed $13.1 million. Both execs were ousted when federal regulators seized the companies in September 2008. The federal government blocked exit packages for the pair worth up to $24 million.

The chief executives' pay could spark new criticism about the government's numerous bailouts, but that may be unfounded, said Mark Borges, principal with management consulting firm Compensia.

Haldeman and Williams each could command between $5 million and $10 million in a similar position in the private sector, Borges estimated, and without the notable challenges and public scrutiny they face at these companies.

"I doubt too many people would look at these jobs and say, 'Gosh, I would love to go there for my next career move,'" Borges said. "The government is getting top notch executives to solve problems that are not easy to solve."

The bulk of their pay is also not guaranteed, Borges said, so these executives can't pocket and run and must meet certain long-term goals or risk giving some of it back.

Freddie Mac's board sets the performance goals for the chief executive, which won't be disclosed until next year. Fannie Mae's filing outlined its corporate goals including "being a recognized leader in the housing recovery," "protecting taxpayers," and "managing risk more effectively."

Fannie Mae and Freddie Mac declined to offer further details on CEO performance goals.

Public anger over Wall Street pay boiled over earlier this year. In response, the Obama administration imposed pay curbs on banks that received government bailouts. All the major banks have since repaid their federal money, largely to escape caps on executive pay.

Former Bank of America Corp. CEO Ken Lewis, for example, agreed to forgo his salary and bonus this year under pressure from the government. Last year, he pocketed more than $9 million in total compensation. Bank of America received $45 billion in government assistance, which it has since repaid.

Freddie Mac hired Haldeman, a former mutual fund executive, in July. At the time, the company disclosed his annual salary of $900,000 but did not disclose other incentive payments. In September, the company hired a new chief financial officer, Ross Kari, and said his pay package would be worth up to $5.5 million.

Williams, formerly Fannie Mae's chief operating officer, took over as CEO in April after the first government-appointed CEO, Herbert Allison, took a job at the Treasury Department. Williams earned a base salary of $676,000 last year, plus a retention award of $260,000.

Washington-based Fannie Mae was created in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War. In 1970, the government formed its sibling and competitor McLean, Va.-based Freddie Mac.

AP Real Estate Reporter Alan Zibel and AP Economics Writer Martin Crutsinger in Washington contributed to this report.

Okay, signing off...

A very merry Christmas, happy Hanukkah, joyous New Year and my best wishes to you in any other way you may celebrate the season. I am looking forward to turning off the markets and enjoying what is really important.

Peace,

Gary

Silly season how-to manual (January effect)

Well, looking around in my portfolios or in the broad markets for that matter, it is not easy to find some candidates for tax loss selling rebounds in January. If anything, with some of my holdings (and former ones) up over 1000% from their bottoms, one could envision eager sellers waiting until January to put off the capital gains for a year.

But insofar as there may be opportunity, would not the uranium sector qualify? Cameco and a few other established uranium companies have done well, but a lot of the little fellers have been in ongoing consolidation patterns for much of the year. This has undoubtedly been one of the weakest sectors out there.

In the next two holiday-abbreviated editions of NFTRH, the writer is going to have some fun and drop the laborious serious stuff, drop the macro indicators, drop the sentiment lectures and chart some stocks, which is my favorite thing because charting individual equities makes me money and/or preserves me capital. We are going to look at several uraniums from a technical standpoint, to see if we can't catch a little wind in January. There may even be a fundamental word or two in there, you never know. :-)

Along with that I think we will do some gold stocks as well. In fact, if the macro inflators win this battle (notice I did not say "war" because we know that is lost) and a cyclical bull does spring forth, it will be time to drop the macro hard core stuff to a bit of a lower volume and turn up some charting opportunities as traders. That's still a very big if, but truth be told, if I were to spend more time on straight charting of equities and less on those damned boring ratio charts, I would not be overly displeased from a recreational standpoint.

Anyway, NFTRH holds 3 U's and I'll start with them. Subscribers with any requests, please mail them along. I almost forgot, pictured here is Uranium Participation Corp., the uranium price tracker that works as a good sector sentiment indicator due to its premium/discount to NAV dynamics.

This is the kind of bottom stance I often buy: RGLD-GDX ratio

Let's take a look at my favorite whipping boy, China (FXI)

Yes, I believe I will remain short for a while longer here.



You have got to love the touts selling emerging markets and foreign stocks as a way to protect yourself from the dreadful US situation.

Real or Memorex? $IRX breaks out

The counter-trend reset of human spirits has dragged on longer than I thought likely. Much longer, actually. Perhaps I was a bit naive last winter projecting a rally that might retrace 38% of the crash and last a few short months.

But it is notable that I am now so bearish I can taste it and it should also be notable that I was so bullish I could taste it a year ago. The big question revolves not around some blogger/newsletter writer. The big question is what was the mainstream media doing when the turn toward bullishness came about?

Come on now, I don't really need to address that again, right? The MSM scared the hell out of the public and aided a grand theft of the public trust, bolstering the coffers of a massive financial services apparatus that now collects mega bonuses, touts equities and attempts to lure the final holdouts - who capitulated in March - back into the water.

The meat of the rally has however, been to the benefit of the corporate welfare state, organized labor and the financial services industry, which tells the public "move along, nothing to see here... forget about what you saw behind the curtain last year... and by the way, would you like to see some of our new income products to help you make back your losses?"

The dollar is rising (as this blog has anticipated again and again, as did NFTRH as part of an ongoing thesis), interest rates are rising on the long end and now... may I present to you the yield on the 3 month t-bill? The chart has finally made a move. As you know, I have dragged out a chart of the $IRX quite often on FOMC day as the Fed pretended they had a decision to make, all the while 0% t-bill rates told them there is no decision. Well now, we have a change as the short end begins to respond to the lack of confidence going on in the long end.

The MSM and the troubadours on Wall Street spin this as positive. "THE" recovery is in process and the Fed will raise rates sooner than the sponsors of the euro-junk that ran with the anti-dollar inflation rally. It's all good. A strong dollar, whodda thunk it could be good for the US recovery. It's a solid one after all, right?

Well, it had better be. It had better be real or else the spendaholic ways of the Obama administration and the easy money policies of the Bernanke Fed are not going to be able to come to the rescue. That is because the treasury market is posturing through all maturity time frames as if it wants to return sensible practices to a treasury market that tells the macro inflators whether or not they can continue creating debt to spur recovery.

I guess what I am saying is that if the bond market does indeed signal recovery, the recovery is on its own. No more spoon feeding of liquidity. So it will be interesting to watch. Gold has taken the hit (again, as anticipated on this blog and in NFTRH) and with strong support at around the $1000 level, it will be an important sign post in determining the authenticity of what the Wizard is asking you to believe.

The pablum quoted below tells you that liquidity is flowing, "THE" recovery is in full swing and oh yes, we will need more spending and stimulus. You can't have it both ways. The stance here remains that the inflators need a downside event or else the inflationary monster they created is going to preclude their ability to continue manufacturing liquidity (treasury rates rising). Now, I look at NFTRH's biggest picture chart of the S&P 500 and that thing is bullish. So again, there will come a point where I stand aside from the moderate bearish stance (as opposed to my current full bearish personal sentiment).

But with Santa in play, Wall Street on full tout and the utterly useless (to real traders) MSM on the job, this mess is going to have to prove itself for more than a couple pumpy weeks in January. Gold is taking an oh so healthy correction, purging the momo's and players. When the correction concludes, we will find out the nature of many things.

Right now, on with silly season!

From Reuters & Bloomberg this morning:

This fanned expectations that the Federal Reserve could raise interest rates sooner than its counterparts in the euro zone and Japan, sending the dollar higher and pushing U.S. Treasury yields to four-month peaks. MSCI world equity index (.MIWD00000PUS) rose 0.3 percent, on track to scoring one of the biggest annual gains in the past 20 years. -- Reuters

Congress and the Obama administration are taking a bigger role in the rescue of the economy from the Federal Reserve, shifting the strategy to stimulus spending from central bank lending... "It may be tough for elected officials to quit spending, prolonging the bailout and adding to the federal budget deficit. “There’s a danger of getting addicted to fiscal stimulus programs,” said David Wyss, chief economist with New York-based Standard & Poor’s, in an interview. “The Fed can print money. Government has to raise taxes or borrow more." --Bloomberg

U.S. consumer spending probably rose in November for the sixth time in seven months as households took advantage of holiday discounting, economists said before reports today. China’s growth may surge to as much as 12 percent next year, according to Citic Securities Co., the nation’s biggest listed brokerage. Consumer confidence in Italy unexpectedly rose in December to the highest in more than seven years after Europe’s fourth-biggest economy emerged from a recession.

“The path of least resistance will continue to be to the upside,” Robert Doll, who helps oversee about $3.2 trillion as chief investment officer for global equities at New York-based BlackRock Inc., said in a Bloomberg Television interview. The economic recovery “means earnings should be somewhat better and liquidity should still be plentiful. That’s a recipe for equities moving higher,” Doll said. --Bloomberg

When in doubt...

Here is another look - the big picture look - at the long term bond market situation. Recall yesterday's $TYX chart with baby and big bro inverted head & shoulders patterns. Those would project the $USB breaking the 100 month EMA 'line in the sand'.

When in doubt... INFLATE. Except that they can't do that from the other side of that 100 month EMA. At least not without destroying all confidence and bringing on a hyper-inflationary price spiral.

Merry Christmas!

Love,

Uncle Ben and Tiny Tim

S&P 500 gets to have it both ways

The broad US stock market (and many other global markets) feasted off of the attempted devaluation of the US currency. The markets that led the recovery, like the precious metals and China (not to mention other emerging markets) are either correcting sharply (PM's) or rolling over (China and emerging markets) in the face of the dollar rebound.

Meanwhile, the US stock market makes a pretense that it has solved its inverse situation with the dollar. Because when you're floating around up there, puffed up in full hubris and sponsored by the lowest quality 'investors', you can be anything you want to be... as long as price holds up and casino patrons remain in party mode.

So what have we here? 30 Year Yield, etc...

Hmmm, it is silly season and the markets are levitating against my short positions. The precious metals correction that NFTRH had anticipated is well in progress. I remain long there. So, by extension I must be pretty bummed out, yeh?

No freaking way. Momma always told me to have patience... and a plan. I do, and if nothing else I look on with a sort of comic bemusement (if that's possible) and await resolution. Noise baby, noise.

Speaking of which, last year during the deflation scare, somebody sent me a particularly good bit of noise, the self-proclaimed "scariest gold chart in the world", targeting gold at below 400. Now, it is easy to produce charts like that during a deflation when there is little apparent chance of the metal actually breaking to new highs, as it ultimately did a few months later.

This is the kind crap that comes out and reinforces the popular sentiment. Right now, that dynamic is going on in the markets to the upside. Well, I will show you what I think is one of the scariest charts in the world; the yield on Larry's 30 year bond.

See the baby inverted H&S (green) that has already broken the neck line? That targets close to 5.2%. If that target comes to be, then we will have broken the neck line on big bro (blue) and its target of 6.8%. How do you think such a rise is going to play with the macro wizards and their ability to sell US debt around the world? At best, I could envision a self-reinforcing buyer's strike on US treasuries as would-be buyers await maximum yields for buying the debt of the hopeless and chronic inflator. At best.

Hussman tells it like it is...

Clarity and Valuation

A good fundamental read of the situation.

NFTRH64 out now

I will probably produce an excerpt later in the week but for now, let me just say #64 is 15+ pages of what it needs to be; sincere analysis not influenced in the least by the high noise/low common sense environment currently swirling.

Have a great Sunday as we head into that most festive of seasons!

NFTRH64 out now.

Edit (6:12) I try to promote the letter without coming off like a know-it-all smart aleck. But it is difficult. That is why I let subscribers do it for me most of the time. From one of NFTRH's most esteemed subscribers: "Gary, sometimes you just nail it; this is one of those times."

Prechter & Muni Bonds

Where I believe Prechter is incorrect is in his view that deflation is the dominant force. Ironically, it is the multi-decade downward slope in long term treasury yields that allows the inflators in high places to do their work. As long as bond yields give them permission, they will be political animals, playing to the crowd and consolidating power.

Also Ironically, I believe it is when/if this changes, our secular "line in the sand" on the long bond is violated, and hyperinflation fears start to break out, then a real deflation will be possible. It would be a deflationary crash into the end of the system. But it would be born of decades of 'successful' inflationary policy.

Anyway, preamble aside (as I always seem to do when presenting something by Prechter), here is an excerpt from the Elliott Wave Theorist on the herd's love of the Muni bond market: Individual Investors Have Jumped Into Another Fire.

NFTRH 1 Year Ago

From NFTRH12, dated 12/20/08:

US Dollar

[chart omitted]

The Dollar should be a good measure of the current system’s ability to maintain itself. As you may know, I have been charting its course of late on the blog as it became wildly over bought in manic and compelling fashion and then swung to the opposite pole, reviled and cast aside by global mobs on the move.

Our Head & Shoulders topping pattern played out like a charm as weakening momentum indicators finally came into force. This shows the kind of non-committed support that was built into the Dollar’s run since July. Again, people who are compelled into something do not tend to be committed in any heartfelt way. The Dollar’s holders over the last four months were compelled by redemption, margin and the fear of losing everything. Thus, when the break came, it came in the form of a collapse. Mania, it never ends well.

One sign that the global bear market is not over and that peoples’ confidence in the system remains intact is the way casino patrons piled out of the USD and into the euro driving both to extremes. The Dollar became manic over sold in a very short time and now we are on the retrace. The 84-85 zone looks like a no-brainer short if it gets that high. The reaction could top out sooner however as the price gets closer to the now rapidly declining EMA 20. In the extreme, I expect the SMA 50 to act as strong resistance.

Of course, given the global casino’s ‘Uncle Buck against the world’ orientation, I would expect my lone bullish stance, the gold stocks, to finish up their correction at whatever time the Dollar decides to top out. Again, the same forces that drove USD higher drove the gold miner fundamentals higher as well. This is another looking glass into the idea that the global casino remains active; they are still going by cartoon analysis that says a strong Dollar has to be bad for all aspects of the ‘resource’ trade. This despite the hard evidence for all to see in our gold-oil, gold-GYX, gold-silver and gold-IRX charts. Importantly, we can now add gold-TNX (10 year rates) and gold-TYX (30 year rates) to the gold-human hopes for prosperity ratios.

Well, with all this talk of gold stocks, why don’t we just transition to this sector next…

And now a word from our sponsor... NFTRH

On November 25, despite a less than bullish view on the precious metals sector due to over bought and over bullish conditions, I found a nice chart and alerted subscribers in an email update. The company is Sabina Silver & Gold, SBB.to, which was bought back in Armageddon '08 and sold for hefty profit. The weekly breakout put it back on radar.



The above chart shows the buy in the low 1's as it re-tested the weekly breakout. Today, with much less risk in the sector, I personally still hold SBB.to with another 17% gain. Like I said before, sometimes ya just gotta go with the chart.



Sabina is a financially sound explorer with nice properties. It is also speculative as it produces nothing. I am not recommending this stock now because I am a stingy bottom feeder, although one could argue that it has near term upside to near 2 if January gets silly, as it sometimes does.

Larry Summers - Did you listen to this man last year?

Here is a Bloomberg article discussing how former Harvard President and current Obama advisor Larry Summers, the guy who sooth-said all those unsophisticated 'investors' into long term US treasuries last spring, pulled the bonehead move of the century for the supposed bastion of higher intelligence, Harvard U.

Harvard Swaps Are So Toxic Even Summers Won't Explain

"Most of the wrong-way bets were made in 2004, when Lawrence Summers, now President Barack Obama’s economic adviser, led the university."

Would it be a stretch to say that our country has become a cartoon? We have rock star economics professors like Krugman and Roubini pitching inflationary policy as a solution. Duh, really? When in doubt, INFLATE! Okay I get it too, you can email me my degree and speaking engagement schedule.

We have clowns like Larry Summers advising other no-nothings on the most important macro issues. We have a Ponzi scheme that is the US-China trade relationship and we are just played out, man.

Silly, dangerous and pretty depressing... but it is what it is and we gots ta deal with it. Okay, back to the newsletter grumpy.

MFN

I see a chart like this and I wonder 'okay, what not so good news is on the way?' Perhaps a share financing to retire some debt? Perhaps another downward guidance of expectations? Ah, the possibilities.

I own a modest amount of MFN and could be convinced to own more, depending on what's coming. Technically, it's not looking so good though. Short term at least.

XLF is still bearish...

...and I am still short.

China - This looks terrible

Yesterday I showed a weekly view. Today let's review the daily. Lower high? Check. Lower low? Well, intraday there it is. No matter how I personally feel about 'their' ability to micromanage markets higher, the chart has said continue holding short (via FXP which has a bottom stance as nice looking as this top one is butt ugly) this market.

How often have you thought you knew what was going to happen only to wish later you had obeyed the chart?

Dear Subscribers...

In reference to an email update sent out last Friday (12/11), please review the updated chart. Particularly the status of RGLD in the lower panel. This is the live chart from that update, now showing day 1 of the signal we were watching for. One day does not constitute a breakdown, but this must be watched closely.

With patience, we may yet see the intermediate target for the correction on the gold stocks.

Silver - no like

SLV updated:










ZSL updated:













Edit (7:13) I rarely if ever mention this because I just don't think about it and the current price is way higher than I would pay. But I own some silver, the real stuff, from way lower prices. You know, some silver rounds and 90% junk quarters in case a hyperinflationary Armageddon descends and I need to barter with the egg man?

Yeh, gold bug nutjob, dat's me.

FXI - Still short China

This has actually been a pretty well-behaved short position (against precious metal longs) as I patiently await coming events. I have a feeling in my bones that these pigs are going to ram all of this stuff higher into bull capitulation. But with a chart like this, what choice is there but to be bearish? A drop below the noted weekly moving average confirms.

This leadership market argues that the coming weeks or VERY few months will see a polar opposite to last March's bull signals.

Oh, this is just too good

"The story of the year was a weak economy that could have been much, much weaker. Thank the man who runs the Federal Reserve, our mild-mannered economic overlord."

Full Story.

I have held open the possibility and even probability that we have seen the lows in the markets with the passing of the capitulation last March. I have twittled (my term since before Twitter) up several scenarios, some of which are bullish for markets in nominal (not in ratio to gold) terms.

But there has also been a scenario that sees the major media - the same major media that worked Armageddon firmly into the public psyche - trumpeting the heroes of the recovery, and indeed the heroes themselves trumpeting the recovery. Now, gentle Ben is too polite to self-aggrandize in the manner of his predecessor, but Time has done it for him. Check out the slide show here.

Just as the major media giving its believers NO HOPE FOR SURVIVAL in March was a bottoming indicator... well, what the heck do you think this is? Also, how perfect is it that they have superimposed Ben's likeness on a dollar bill? The man cast against the currency he devalues to bring on the much hailed recovery.

Lest anyone need reminding of what Time had to say last year...

US dollar situation - pretty clear now

We were watching a 'potential' bottom in the dollar. We got another nugget of confirmation. Now the USD looks pretty compelling, beyond some likelihood of short term correction.

Here is another view of the USD daily chart. What we have here is some pretty good confirmation that it has bottomed. In fact, Uncle Buck is now getting a bit frothy to the UPSIDE and could cool down short term, allowing for one final push higher in the Hope '09 festivities. We have after all, not yet had a real upside capitulation in markets - on panicky volume (dat would be da public in da house, joinin' da pahhty).



The weekly USD chart shows a firm picture of a market with some decent upside. If it rises to threaten our two higher resistance levels at 80 and 82, then it will be testing the terrible fundamental damage that was done to it by monthly (big picture) chart by losing those levels earlier this year.



But for now, we just micro-manage the ending of Hope '09, which may see some partying in 2010 before flame out. It will depend on what kind of correction the dollar takes off this initial thrust off the bottom.

Long bond, still watching?

Well, Karl Denninger is watching. Among other things, he sees the inverted H&S [like object] I noted yesterday and goes into some good detail on the implications:

TIC Data Confirms: Foreign Appetite Gone

I am not prepared to comment on what the outcome will be, other than to say that what we have here is our long watched line in the sand, the EMA 100 on the TYX under threat. This was discussed in #63 and will be watched constantly going forward. But I am going to keep the hysterics muted for now.

What the heck, I think I am going to publish a brief excerpt from #63 tomorrow (including the following) note:

But wait, the long bond yield is becoming frisky. The dupes who bought those bonds
during the crisis are beginning to feel as though they have been fooled. Those left in long
bonds are beginning to ask the question “who is the mark?” and unable to identify one,
are beginning to ponder the question “is it me?”

NFTRH continues to assert that there can be no new inflationary bailout, per the
president’s plans, without first tamping down inflation expectations. The problem is, in a
financial world that now tends to violently seek out extremes, any tamping is likely to
become another bi-polar event.

Uncle Buck now AROON up

A couple more bulls join the other guy.

Once again dredging through the past...

Whether or not you choose to subscribe to what I do in detail each week in NFTRH, I have a general idea that readers of the blog are not the usual financial market participants; that you are generally a group of people who have moved beyond the bromides and sooth-sayings of Wall Street, and I would guess many of you have moved beyond the need to settle in with the herd for comfort.

So, I guess in some respects I preach to the converted each day. But there are new readers all the time and I see this as a marathon, not a sprint. I have been doing this for enough years now to realize that it is something in me, driven by a need to put out a bullshit-free view on things. That does not mean I am always right, but it does mean that I do not feel this is just another easy to swallow financial blog, passing along easy to digest info-bits on the markets.

It has been a long and strange journey since I began writing publicly. Cattle prodded into action by a consciousness raising 'guru', the website and later the blog came to be simply because I was so concerned about the nature of modern financial system, I simply had to find a way to get the word(s) out.

Not just my own of course. I remember that one of the primary voices I wanted to help get heard was that of David Walker, former US General Accounting Office chief. Right there, on the government's own web servers was this earnest man telling the truth. Did the herd listen? Well, how many people's IRA's are still below their levels of two years ago? No, the herd swallowed the Wall Street bromides. The herd followed.

Things have evolved here in biiwii land. You can only put your full passion into something for free for so long without either progressing or burning out. I chose to progress into the commercial newsletter world. But nothing has fundamentally changed. The herd will always be the herd. Check out this tiny little blurb from 2006. It was written exactly 3 years ago during a stretch where gold had been consolidating downward for most of the year and a lot of negativity was cropping up. The yearly candles on this chart simply showed it had gotten ahead of itself.

Calm the noise whenever possible, while at the same time maintaining vigilance.

Royal Gold - HUI ratio

Don't know about you, but this chart says to me that there is less risk in RGLD than in the general HUI right now.

Long bond yield - watch it

"Buy stocks or buy bonds?" wonders the herd. That is the way the financial establishment would like to keep it, in that neat little package. Funny though, that the most important bond of all, the long treasury bond, is rarely used in the financial establishment's decision making on where to put the sheep... I mean, its clients.

Well, as we know, the long bond is threatening to do something that is very big and very noteworthy to people who want to be on the right side of 2010. This daily chart would target 5.1% if the neck line of the inverted H&S like object (that is what I call H&S that are ill formed or technically have issues, like no previous down trend to reverse from - just like the major formation in gold that I neigh said as a true H&S). The target on a breakout remains the same however, just like with gold.

The target of 5.1% would pierce our biggest picture line in the sand, the 100 month EMA (currently 4.8%) and create a lot of intensity for the markets. Now, in the agonizing way of markets, this piercing would not represent a secular breaking of the line. We would then need to wait for a monthly close above and even then, micro-manage events.

Jeez, no wonder most people don't like to do this. It sucks to have to look at things like this and ask questions like that, for months on end. But you know what? It is necessary and that is why people pay their respective professionals (good ones and not so good ones) to do it for them.

NFTRH63 out now

Well, they say that no salesman can market or sell the way the owner of a company can. So, as the owner of NFTRH, I am going just come out and tell you that I think #63 is a quality piece of work. I would have to believe this or else I should not be in business, eh?

As Old Turkey said in the indispensable Reminiscences of a Stock Operator, "be right and sit tight". NFTRH thinks it is right and is sitting tight with its ongoing plan, while another wise old saying 'you only need one good trade a year' remains illuminated. Well, maybe two good trades a year.

With patience, the macro will sort itself out and the real money will be made, or preserved. Things are coming to an inflection point and #63 does its best to illustrate the parameters which ultimately will define what we'll call extreme inflation fear or its polar opposite, deflation fear.

NFTRH63 out now.

Have a great remainder of your weekend.

NFTRH 1 Year Ago

Well, my point was somebody's got to buy this crap (then soaring long term treasuries). And buy it they did. At the behest of Larry Summers, Ben Bernanke, the financial media and the full faith and credit of the United States of America. How are those compliant, convention-worshiping investors feeling right about now?

From NFTRH12, dated December 20, 2008:

Act of Desperation

The monetization of unserviceable debt has been in the Fed’s toolbox all along. Academic wunderkind Ben Bernanke has used many conventional interest rate and liquidity tools, but with the recent announcement that the Fed will buy long-term US Treasury bonds, he is opening the door to the nuclear option. This tool actually resides not in the toolbox but in a separate room, locked in a titanium-nickel composite alloy vault accessible by a secret algorithm code. From the Fed’s most recent monetary policy release on December 16:

“The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”

This was of course, dictated by the t-bill market and is US Dollar non-supportive. But with Japan and the rest of the industrialized world falling right in line with this theme, it is truly going to be a race to the bottom for global currencies, not just the USD. I believe that people who focus grimly on the US Dollar are misallocating their energies. Given its heretofore status as ‘world reserve currency’ the Dollar is an important linchpin in the unraveling mess, but is by no means the only culprit in the global debt paper bubble now unwinding. In fact, it could be argued that the primary fundamental underpinning of the Dollar is the enormous albeit misguided demand for US Treasuries as the deflationary backdrop begins to take root.

As I listen to media commentators dissect Fed policy, the auto bailouts, the bank bailouts and speculate on all manner of would-be welfare to come from the new US administration and its new New Deal, I cannot help but think about how the entire outmoded apparatus is trying to pretend this is normal or at least readily subject to standard analysis. What I am trying to say is that we are down the rabbit hole, in Wonderland. This is abnormal, asymmetrical and just plain off the charts. Standard methods of quantifying an insane financial system will work against the masses that fall for it – yet again.

The Fed is talking about buying up unproductive legacy (debt) to stave off economic devastation, and that may be the only option now. But the same talking heads – the ones that never saw this coming – expert in their dissection of what is wrong and how to fix it, do not look ahead. They do not see, nor evidently care about the big picture.

Pictured above is the iShares long term treasury bond fund, TLT [chart not available for this excerpt]. Under the current shroud of deflation, Mr. Bernanke infers that the Fed will buy up the long term debt of a chronic and hopeless inflator and of course that is the green light for the next mania, for the frightened herds to come piling in. It’s deflation after all and in a deflation you own treasuries. Everyone knows that, especially now. “No matter that treasury bonds are over bought, at least we know we’ll get our ‘money’ back one day” says the compliant herd.

I am not here to bash treasuries. As you may know I have kept all cash equivalent funds in treasury money markets, t-bills and short term treasuries for years. I have done so because it is the safest haven from domino defaults that I have viewed as likely for years. Just this week however, with the manic chart above in mind, I have begun to scale into its ultra-short cousin, TBT. We will call this a little hedge on the t-bills and short term treasuries I continue to hold.

But the story here is one of cattle being branded, tended and herded toward that big, ominous looking building over there with the strange and terrible noises emanating from it. Fighting the Fed is a dangerous game in the short term and this mania has got some heavy hitters as sponsors. But what I see here is an instant market created for long dated treasuries by Bernanke’s jawbone and a disastrous economic backdrop that is going to get worse before it gets better.

Yes, buying long term treasuries is safe if you define safety as getting your money back with a little ‘income’ to boot. But in the big picture, it is the value of said money that is in question. As a nation, the US is committing to make whole $Trillions upon $Trillions in un-payable liabilities. This is being done by willing money into existence by various methods, with the treasury market front and center. The US is trading upon its rapidly disintegrating reputation. It’s debt is non-productive and its market carries on as long as the masses are willing to suspend reality and maintain confidence in the system.

The herd buys long bonds and does what it is supposed to do. Better (for we who would prepare for a whopper of an inflation problem to come) they do this in compliance with convention than after being compelled by government (IRA filled with 30, 60 or 100 year bonds anyone?) in the name of national interest. There is no patsy like a subservient, pliable patsy. People who are compelled into certain actions may tend to get a bit revolutionary, and we cannot have that, now can we?

That is why we are here, looking not for riches and joy, but rather for relative protection from the fate that awaits the vast herds now once again being led by carrots they don’t even understand.

XLF - Potential H&S top

And here is one I remain short, the financials.

This is a game of emotional discipline, which I will ultimately employ regardless of what comes to pass. But I tell you, if these pigs manage to break this up and out of the bearish looking topping formation (neck line has not yet been threatened), I am going to get really aggravated.

This whole market has the feel of something coming un-stitched so slowly as to be barely noticeable. But I am going to stick to the idea that official meddling can only fool a lot of people (including bears, into capitulation) for so long. So, either the whole mess is going down for a while (or longer), or the gold sector is going to get back in gear and reassert upside leadership.

Short silver no more

I decided to try a new concept today; make money on ZSL. And you can't make money unless you sell. Despite this breakout in the ultra silver short, I am taking my 14% gain this time instead of hedging endlessly. That's what the shorts on other markets are for.

Enough risk has been removed from a long gold miner stance that ZSL is expendable.

This is not to say I am bullish on silver (or the miners for that matter) in the short term. I am not, at least not for a real [intermediate] trade. The gold-silver ratio is getting very interesting and if it stays interesting, lots of stuff will be under pressure.

Gold stocks... myths vs. realities

Gold stocks are getting bashed a bit by those two creeps :-) over at Inca Kola and Trend & Value, with the chief instigator being Cam Hui (now, is that not the best name for a gold stock commentator?).

First off, I agree with these three gentlemen, in their big picture views. But it was precisely the gold stock leverage vs. the metal that had me buying like crazy last year. Gold stocks had become a value for an intermediate term trade (NFTRH63 is going to talk a bit about short term thinking/trading vs. intermediate term - long term, we're all dead :-)) as measured in the metal.

Now? Not so much. In fact, not at all. The value proposition has drained from the gold stocks in relation to just owning the timeless metal. The HUI-Gold ratio made a peak in late May, which signaled that the value players were now in caution mode. It is no coincidence that this blog has been writing 'risk is rising' since about then - after being full bull from November, 2008. For me, caution mode means trading, profit taking and yes, holding a core. But also shorting silver, shorting various aspects of the broader markets and churning around through this process as things get sorted out.

There will come another time that gold stock leverage can be played for an intermediate swing. But as the 3 amigos above have noted, that time is not yet here. And yes, I fully agree with Lucas about the shady nature of many gold mining companies and they sure as hell are not gold. They are companies run by faulty people (aren't we all?) in a tricky business with discovery and political risk all around.

There, I just wanted to put my .02 in with these gentlemen.

Yield Curve

The yield curve is an old theme that I have not mentioned in a while because to me it is a given that confidence in monetary managers is being lost and the message of the unruly yield curve has long since been driven home. But Mish has come out with an article about it centering on this piece from Bloomberg, and if you are unclear about what a rising yield curve means, you should read them both.

Meanwhile, chartus geekus has worked up another confusing, busy bunch of lines and squiggles that attempts to show why I maintain a long gold/gold stocks stance vs. shorts on certain markets. Get Zen-like and reflect up on it. The most extreme curve, the 30 year / 3 mo. t-bill, is off the hook and out of control. But the more 'free' market oriented 30 year/5 year has broken out as well (see lower panel).

Folks, this thing is broken no matter what the wizard protests. The little doggie has pulled back the curtain...

GBG-NGD ratio trade progressing

I traded in NGD (and its baggage) for GBG due to the technical risk/reward profile implied by the chart. The trade is progressing nicely. Updated chart shown here.

Uncle Buck and one lonely bull

Pssst... come 'ere. Did you hear the one about the guy who's still bullish the US dollar? Yes, he actually exists. No no, I am not including the perpetually dollar bullish Prechter and Hochberg. They are a given.

But aside from them, I heard a rumor that this other guy actually exists. Fear not however Hope '09 participants; what are the odds that this lone guy would be right against an entire financial world on the other side of that trade?

Everybody from government to monetary officials are stacked against the USD. Wall Street and the financial establishment remain on the other side of this lucrative trade as they pitch their wares to the traumatized public. The gold bugs who think rising copper and oil is good for the gold sector? They're on board and indeed, leading the charge. So why worry about a dollar rebound?

Well, the dollar has done some terrible technical work on the big picture, which certainly informs NFTRH's view for 2010, but in the short term all I see is what could be interpreted as a break from a falling wedge (not shown on this chart that is already too busy), a 3rd day above the SMA 50 (for the first time on this systematic and grinding decline), RSI and MACD looking good and a technical target up there at around the SMA 200.

If we are to get a #2 leg in a mini cyclical bull (in hope), the dollar will first rise and correct this mess, and that one lonely bull would be king of the world for a short while on a short covering rally in USD. If not, AGAIG '09 (as good as it gets) will continue to terminus and our protagonist of one will join the rest of the world in staring down Bob Prechter.

Why straight bears may have it wrong again...

...and I don't mean as opposed to gay bears. I mean straight bears who go far net short as opposed to bears who short the broad or selected markets while maintaining the view that perhaps this construct will remain buoyant or rise to some degree due to effects of inflation, monetary debasement or printaholic, spendaholic behavior. Another cyclical bull market leg is very possible pending needed correction.

I used this chart in NFTRH a few months ago before the COMPQ had surmounted the top tine of the downward pointing fork. I will let you ponder the potential implications here because the ongoing analysis must be reserved for the letter. But it is interesting is it not? There is certainly the potential for disappointment on the part of bears that think there will be an Armageddon '10. At least in the first half of '10. It is also why I remain a gold and gold stock investor.

Long the good stuff and short some of the garbage. It has been working nicely for weeks now.

The headline says it all...

Stocks Fall At Open Even as Dollar Falls --AP

What??? Why is currency debasement not working today? I demand an answer for this. This is un American I tell you!

Oh by the way, I just spoke to an insurance rep, and the average healthcare premium increase is around 35%. Yes, that is going to do the economy a ton of good. I ran my fairly obvious theory that the companies are gouging now while the gouging is good (pre-healthcare bill) by him and he offered no dispute of that view.

All FWIW.

Edit (10:55) Ah, here comes the pig now. Dow up 29. Long live the currency debasement fantasy!

Just a thought...

Are the markets effectively discounting the effects of the outrageous rate increases in healthcare insurance now hitting small companies and self employed people at renewal time? It varies, but these are not small incremental increases this year.

One large health insurance provider states that they are making adjustments due to an error in the way they calculated rates the last couple years. That is fine if you define the adjustment as "We are scared shitless about healthcare reform and we are going to ram home a windfall rate increase this year in anticipation. We are colluding with all the other providers and what the hell are you going to do about it, anyway?"

My initial thought is that the greedy people running these companies are just a different shade of the same animal that runs many Wall Street firms. The public exists to feed these firms. This is a sign that something from government is all but a done deal in the eyes of the big insurers, or they would not be attacking their customer base like this while they are still free to do so. Makes one miss the old slow and steady gouging over time.

Let's see, jobs still have not recovered. The president has obviously been made aware that the real economy remains in crisis after the criminals in high places have been made whole again. Inflationary monetary policies are now needed for the regular folk and for now, our creditors continue to play along. Yes, 2010 should be an interesting year.

Obama urges major new stimulus, jobs spending

By TOM RAUM, Associated Press Writer Tom Raum, Associated Press Writer – 13 mins ago

WASHINGTON – President Barack Obama called for a major new burst of federal spending Tuesday, aiming to jolt the wobbly economy into a stronger recovery and reduce painfully persistent double-digit unemployment. Because after all, the big banks, co-conspirators in the melt-down, have repaid TARP and are now gorging at the trough again, without lending into the economy.

Despite Republican criticism concerning record federal deficits, Obama said the U.S. must continue to "spend our way out of this recession" as long as so many people are out of work. More than 7 million Americans have lost their jobs since the recession began two years ago, and the jobless rate stands at 10 percent, a statistic Obama called "staggering. Republicans should just keep quiet. They have no moral standing.

Congressional approval would be required for the new spending, the amount unspecified but sure to be at least tens of billions of dollars. Ho hum.

"We avoided the depression many feared," Obama said in a speech at the Brookings Institution, a Washington think tank. But, he added, "Our work is far from done." We did? And yes, it is.

It was the third time in a week the president had presided over a high-profile event on jobs, responding to rising pleas in Congress that he spend more time discussing unemployment as midterm election season draws near. Ah, the political angle...

Obama proposed new spending for highway and bridge construction, for small business tax cuts and for retrofitting millions of homes to make them more energy-efficient. He said he wanted to extend economic stimulus programs to keep unemployment insurance from expiring for millions of out-of-work Americans and to help laid-off workers keep their health insurance. He proposed an additional $250 apiece in stimulus spending for seniors and veterans and aid to state and local governments to discourage them from laying off teachers, police officers and firefighters. Here comes the same old laundry list.

He did not give a price tag for the new package but said he would work with Congress on deciding how to pay for it. Yes, Congress... they'll put it to good work.

Proposals in Congress being advanced by Democratic leaders that cover much the same ground would add up to $170 billion or more. Administration aides suggested the infrastructure proposals alone being weighed by the president could cost about $50 billion. WE NEED MORE INFRASTRUCTURE I TELL YOU!! When the chips are down, build out infrastructure!

Republicans ridiculed the president's speech and his parallel call for doing more to hold down government deficits. Shut up.

"At least the president's proposal will result in one new job — he'll need to hire a magician to make this new deficit spending appear fiscally responsible," said Sen. Judd Gregg of New Hampshire, the senior Republican on the Senate Budget Committee. House GOP leader John Boehner of Ohio declared the president "out of ideas and out of touch." The worst thing about turning out the current crazies in 2010 is that these clowns are intact, unchanged and ready to pick up where they left off.

While Obama did not propose the kind of direct federal public works jobs that were created in the 1930s, he said government action could set the stage for more job creation by private business. Many of his proposals would extend or expand programs included in the mammoth $787 billion stimulus package passed last winter. What is this gobbledeegook?

While acknowledging increasing concerns in Congress and among the public over the nation's growing debt, Obama said critics present a "false choice" between paying down deficits and investing in job creation and economic growth. Err, dat's true. Off the charts is off the charts.

"Even as we have had to spend our way out of this recession in the near term, we have begun to make the hard choices necessary to get our country on a more stable fiscal footing in the long run," he said. In the long run we are all dead.

To find money to pay for the new programs, the administration is pointing to the Treasury Department's report on Monday that it expects to get back $200 billion in taxpayer-approved bank bailout funds faster than expected. What taxpayers approved that bailout?

Obama suggested this windfall would help the government spend money on job creation at the same time it eats into the nation's debt, which now totals $12 trillion. Ha ha ha ha...

He called the bank bailout, under the 2008 Troubled Asset Relief Program (TARP), "galling." Right on my man.

"There has rarely been a less loved — or more necessary — emergency program," Obama said. Half right.

The program is due to go out of business at the end of this year, although Congress is expected to extend it to next October. Uncle Buck, you listening? China, you listening?

The perception that the program mainly bailed out Wall Street bankers while doing little to help ordinary Americans has fed anti-Washington sentiment across the nation. People, just relax... go shopping. HD TVs are a real bargain now. Lot's of good shows on to take your mind off those revolutionary fantasies.

In clear acknowledgment of this sentiment, Obama said the unexpected $200 billion in repaid loans and other savings "gives us a chance to pay down the deficit faster than we thought possible and to shift funds that would have gone to help the banks on Wall Street to help create jobs on Main Street." I am still waiting for Wall Street to pay the interest on these loans and by interest I mean the accumulated and exponential damage they caused to the domestic and global economies through their self-enriching criminality. Don't give me this piddling $200 billion garbage. That is just the first principle payment. These crooks were allowed to wreck my country, and it wasn't under the oversight of the democrats either.

But Republicans cried foul, claiming that the leftover and repaid TARP money must be used exclusively for deficit reduction or additional bank bailouts, as the law setting it up spells out, and not for what amounts to an expensive new stimulus program to create jobs.

"The stimulus money clearly was a spending bill. TARP was a loan — a loan to be paid back. And we know that a number of the banks are, in fact, paying it back," said Senate Minority Leader Mitch McConnell, R-Ky. "So I don't think raiding a loan program to launch another spending spree is the best way to create jobs." Just be quiet zippy.

David Walker, president of the Peter G. Peterson Foundation, a group that promotes fiscal responsibility, said that just because the government hasn't had to spend all the TARP money on banks "doesn't mean we should automatically spend it on something else."

Walker, former head of Congress' Government Accountability Office, said in an interview that clearly defined objectives or conditions were missing from both the $700 billion bank bailout law passed in October 2008 and this year's $787 billion stimulus package. He said, "You can't change history, but you need to learn from past mistakes to make sure that you don't repeat them." Now you Mr. Walker, have my full attention and respect. Yes you do. You raised your growing concerns to all who would listen (biiwii.com notes you as a major inspiration) under a REPUBLICAN administration that was not so big on listening.

Liberal groups praised Obama's new initiatives. "We think that Obama made a step in the right direction," said Karen Dolan of the Institute for Policy Studies. "He's finally tapping into that moral outrage of the American people at the Wall Street bailouts." Here come the crazies.

A major part of his package includes new incentives for small businesses, which account for two-thirds of the nation's work force. He proposed a new tax cut for small businesses that hire in 2010 and an elimination for one year of the capital gains tax on profits from small-business investments. Okay, but like with the big boy bailout, where's the money coming from? Printing, yes I know. But do you think that has repercussions? I do.

Obama also proposed an elimination of fees on loans to small businesses, coupled with federal guarantees of those loans through the end of next year. His proposal for new tax breaks for energy-efficient retrofits in homes is modeled on the now-expired Cash for Clunkers rebates for trading in used vehicles for more fuel-efficient vehicles. Some administration officials have dubbed the proposed new program "Cash for Caulkers." Jesus.

Although the unemployment rate inched down to 10 percent in November from 10.2 percent in October, more of America's largest companies will shrink their staffs than will hire in the next six months, according to a new survey by the Business Roundtable. The next post is going to include a tidbit that will have an effect here if I am reading this right.

A Labor Department report on Tuesday showed there were about 6.3 unemployed people, on average, for each job opening in October. Comparable November figures were not yet available.